Morgan Stanley, Goldman Sachs slash oil forecasts on Iran deal

Morgan Stanley ↘0.80% and Goldman Sachs ↘0.23% both cut Q4 Brent crude forecasts to $80 a barrel, citing the deal’s impact on supply timelines.bloomberg
The U.S.-Iran preliminary agreement sent oil to three-month lows and fueled a Wall Street rally, with the Dow hitting a record close Monday, according to Reuters.reuters
A formal signing ceremony is set for June 19 in Switzerland, though details remain unclear and Iran’s nuclear program is deferred to future talks.reuters

Wall Street Banks Cut Oil Forecasts After US-Iran Deal

Goldman Sachs and Morgan Stanley both slashed their crude oil price forecasts this week after the United States and Iran signed a preliminary agreement to end their conflict and reopen the Strait of Hormuz, a development that sent oil prices tumbling to three-month lows.

Banks See Faster Supply Recovery

Goldman Sachs lowered its fourth-quarter Brent crude forecast to $80 a barrel from $90 and cut its 2027 average estimate to $75 from $80, according to Asharq Al-Awsat. The revision marked the bank’s second cut in a week. Morgan Stanley made even deeper reductions, lowering its third-quarter Brent forecast to $90 from $100 and its fourth-quarter outlook by $15 to $80, with analysts including Martijn Rats noting the timeline for Middle East output recovery had been “brought forward by one to two weeks,” Bloomberg reported.bloomberg

The cuts reflect a rapid shift in sentiment after weeks of elevated prices tied to the Strait of Hormuz closure, which had prompted Fitch Ratings to raise its 2026 average Brent forecast to $87 a barrel just days earlier.wsj

The Deal That Moved Markets

President Trump announced on Sunday that a framework agreement had been reached with Iran, sending oil futures down roughly 4% as markets reopened. On Monday, Brent crude fell more than 5% to around $82.84 a barrel. U.S. stock indexes rallied sharply, with the Nasdaq Composite climbing more than 3% and the Dow Jones Industrial Average closing at a record high.reuters

Trump stated the Strait of Hormuz would be “completely opened” by Friday, with Pakistan — which facilitated negotiations — announcing a formal signing ceremony scheduled for June 19 in Switzerland. Reuters reported that details of the agreement remain unclear and that a lasting peace is still to be negotiated.bbc

Diverging Outlooks

While the deal has eased immediate supply fears, Wall Street remains divided on the broader trajectory of oil prices. The conflict had killed at least 7,000 people and upended global energy markets for months. Before the war, JPMorgan’s commodities team had projected Brent falling to $58 in 2026 under normal supply conditions. With the Hormuz reopening now accelerating Gulf supply flows, some analysts see a return toward those lower levels, while others caution that the deal’s durability remains uncertain and Iran’s nuclear program is yet to be addressed.reuters